What Are The Advantages and Disadvantages of Government Grants For Businesses?

A business cannot operate without a streamlined and steady source of finance.

Of course, this is one of the many considerations before you start a business, and though you may think that you got everything covered on your own or with your prior financial sources, business is a very unpredictable venture.

So, what can you do when you are faced with financial burdens? Government grants are definitely something to look into.

What Are Government Grants?

Governments are when the local government-funded agency or other organizations provide funding for business ventures and other projects. They are put in place so that these businesses can support government objectives and initiatives, and they do not require the awardees to repay.

The government grant is amongst the most common, sought-after, and favorable grants that a business can want. With a lot of benefits and only a few downsides, it can help a business achieve its potential, find its rhythm, or even find its identity.

To help give you a clearer idea, here are a few examples of government grants in Canada and in the United States of America. 

Examples Of Government Funding Programs in the U.S.A. and Canada

Rural eConnectivity Program

The Rural eConnectivity Program is an agency of the United States Department of Agriculture(USDA) that aims to provide, develop, and spread broadband connectivity to rural areas around the country.

Only some people can be given a grant or an opportunity, and there will always be qualifications and specifications that need to be met in order to acquire a grant. Some of these include:

Eligible applicants include:

  • Tribes and tribal governments and organizations
  • For-profit organizations
  • Non-profit entities
  • Cooperation organizations
  • Limited liability agencies

The area which ReConnect shall provide will also have qualifications, some being:

  • The area must be rural
  • Capable of providing at least 100Mbps broadband service to the vicinity of the proposed funded service area.
  • At least 50% of the families within the area do not have access to quality broadband.

Small Business Innovation Research Program (SBIR)

The Small Business Innovation Research Program, or the SBIR, is a program that encourages small businesses in the USA to participate in research initiatives and projects in the hopes of commercialization. This allows them to explore their technological prospects and the potential to profit from the commercialization.

The SBIR promotes scientific excellence and development in hopes that these small businesses can be able to stimulate technology in their business processes. The other missions of SBIR include:

  • Encourage participation of economically disadvantaged people.
  • Federal research
  • Increase commercialization of innovations from federal research and development funding.
  • Foster technology transfer between small businesses and research institutions.

National Research Council of Canada Industrial Research Assistance Program  (NRC-IRAP)

The National Research Council of Canada Industrial Research Assistance Program or NRC-IRAP provides assistance to micro businesses located in the country by granting them advisory services as well as financial support. The potential to innovate and grow larger can be made possible through funds that could reach up to $250,000 or higher, depending on the circumstance.

The NRC IRAP’s main mission is to promote business growth, marketing development, and the adoption of new technology in these businesses. The applicants eligible for the grant must have the following qualifications:

  • Less than 500 active employees
  • Must be a profit-oriented small-time business.
  • Is planning for long-term growth and has its sights set on development and commercialization. 
  • Willing to take new products.
  • Willing to invest in new technology.

To learn more about the National Research Council of Canada, click here. 

Scientific Research and Experimental Development (SRED)

Scientific Research and Experimental Development, or SRED, is one of the leading programs that drive the science and technology sectors of Canada forward. Its primary focus is to help businesses engage in research so that they may find some financial semblance in certain projects that could have been more profitable. 

In order to become eligible for the SRED refunds, the grantee should be in pursuit of technological research and advancement.

Operations should be done systematically and with scientific backup, and observations should be recorded accordingly.

Advantages of Government Grants

  1. Free, Non-repayable Funding

The most obvious advantage a business grant offers is free money. A startup business would be foolish to deny some free funding to help get its footing. Even stable businesses can use some extra financial help as it gives them the opportunity to expand, explore, and be flexible with prospects.

Moreover, grants will not require you to reimburse the funding given to you. Grants are basically a helping hand, and depending on the size of the grant, it will most certainly guarantee that a business is launched into imminent success.

The size of the grant given will depend on qualifications, the motive of both the organization and the business, and the size of the ask itself. Regardless, free additional funding is enough to lure in any business.

  1. Grants Want To Be Given

Organizations and programs that provide grants are always willing to accommodate the business that put themselves forward. They will most likely have their information available on the internet and will provide you will the possible information that will help you decide whether or not they are the right grant for you.

There are multiple programs in multiple industries that are available, and they will make sure that you know what you are getting into. When the whats, wheres, and hows are all available, there is very little reason not to be interested in a partnership with at least one organization.

  1. After One Grant Comes the Other

One thing about business grants is that despite the allure of their concept, it takes a lot of work to acquire one. However, given the circumstance that you do acquire your grant, there are more benefits that fall your way other than just that free funding.

Once you have already acquired the first grant, think of it as something like a medal. Other organizations can trust you that you are actually a business that deserves that grant, and they may be in the interest of giving you some support as well.

  1. Gain Hefty Credibility

If you are a startup business, you are correct to look for a grant that will provide you with good capital and resources. However, it is also a major reason to look for a grant, as this will increase your credibility and stock astronomically.

Nothing is more reliable and authentic in the business world than being given a grant. Having a grant will increase your visibility, and depending on the circumstances of your grant, it may have a bigger impact than the funding received.

A partnership with a grant will get your business concept out there and dress you up as a serious contender in your industry.

Disadvantages of Government Grants

  1. It Demands Time

Grants may be easy on the ear, but it is challenging in practice.

Although grants will not require you to return the money, they will require a lot of paperwork from you. The grant will demand that you know your business inside and out before and after application. You must be confident with your business venture if you hope to acquire a grant. That means creating a convincing proposal, gathering a team of professionals, and being firm with the ideals of your business.

  1. Fierce Competition

Remember, you are not the only business in need of some extra funding. Actually, all businesses may be in line for some free funding.

Yes, call yourself naive if you thought grants would be placed at your doorstep when you applied for one. Though it may just turn out that way, given that you nail all the requirements, that does not rule out all the other businesses who may have just nailed the application just as hard as you did.

Maybe even better.

Grants offer many benefits, which in and of itself can be a disadvantage as it will be very difficult to fight for them in a landscape where individuals are hungry and hunting. 

With thousands of businesses sending grant proposals a day, only 200 will be given financial support. With the business landscape becoming increasingly dense and digitized, expect getting grants will be challenging.

  1. Time is Of the Essence

Business grants, though helpful, will not be helpful for as long as you might expect them to be. Grants are a platform for you to launch your business into stability and relevancy. 

Whether or not you do reach that point is not up to the grant, and before you know it, you will find yourself out of the contract. Only some business grants are renewable, and once the initial deal is over, you will lose that source of funding. 

So, do not be super elated once you are given that grant, as this only means that the pressure is on. You will need to ensure that the funding is carefully utilized and that you have a capable workforce that can live up to the expectations of your partners.

Though this means that business grants are a short-term solution, they can provide long-term effects if used correctly.

Should You Get a Government Grant?

In the business world, a lot of things can go wrong.

You will be put in situations where revenue is dwindling, resources are depleted without your control, or a rogue employee decides to mess up an entire operation. These things happen, and it puts a great strain on your business.

Business grants will provide you with the help you need to keep afloat in times of need and help you maintain a streamlined performance. Consistency is key when doing business, and acquiring that grant to help you go the extra mile is definitely encouraged.

We have listed down most of the pros and cons when it comes to getting a business grant, and it is apparent that the pros still outweigh the cons. You merely have to make the most out of the opportunity, and the grant will only measure how much spirit and belief you have in your business to keep it going.


Whether you are a startup business or one that needs a little revitalization, business grants will give you the kick you need to achieve your business goals. Do your research, map your financial needs, list your goals, and make sure that your mission and vision are in check. If you complete all the necessary steps, you can have a chance to get the grant that you want for your business.

Author’s Bio:

Shelly Solis is a blogger and a content specialist. She is a content writer, search engine optimization specialist, and co-founder of SaaSLaunchr, a website dedicated to helping startups and businesses. She loves to connect with other like-minded individuals on LinkedIn.


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